Hi there Xela - perhaps I need to clarify.... if you conduct a runs test for randomness on your trades you will find out if they are random or not. My returns are close to randomly distributed so I have to expect the same odds of winning each time I trade. Therefore I trade a fixed percentage of equity every time. HOWEVER, I do run some more aggressive accounts where I use the historical drawdowns to plan upping the size, and I have enough trading observations to make that call based on how my systems trades etc. I use a portfolio of low-correlated systems in making this judgement call only on my most aggressive accounts. Regards and thx for your comments.
Best ways a daytrader can increase his size if he is already consistently profitable?
- Thread starter Daal
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Hi there Xela - perhaps I need to clarify.... if you conduct a runs test for randomness on your trades you will find out if they are random or not. My returns are close to randomly distributed so I have to expect the same odds of winning each time I trade. Therefore I trade a fixed percentage of equity every time. HOWEVER, I do run some more aggressive accounts where I use the historical drawdowns to plan upping the size, and I have enough trading observations to make that call based on how my systems trades etc. I use a portfolio of low-correlated systems in making this judgement call only on my most aggressive accounts. Regards and thx for your comments.
Size is always related to TLNW. If managing position size correctly and prudently , you would never have a situation where there is fear involved.
IMHO the trader described above does not have a working method , or does not believe in the method at hand. Therefore he himself questioned the real reason behind the consistency of his profits: consciously or subconsciously he believes that it was luck not his method and skills behind this consistency. That were the fear of increasing position's size comes from.
If one knows how to swim, it does not matter if one swims in 10 ft. deep pool or in 10 mile deep ocean. If one does not know how to swim one will drown all the same eventually.
Continue with the current position size until you will start to believe that you can swim, or until consistency will cease to exist, and you will know that you were just lucky.
autotradingalgos....thanks for this idea, I see this could work w my system....back testing now. Cheers.
Edit: Oddly my data goes back to 2004 as well, Oct 4 2004.
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well not a bad place to start.... a few market swings and interest rate cycles included since then. Nice low vol stretch from 04 to 06. Do a runs test on your system data... helped alot in my planning. Regards
That's very obvious and has always been advised. Anything less than 6 months of savings is just asking for trouble but you really should have enough for 1-2 years. It doesn't mean that you should keep the money in a savings account but the amount should be there so if you draw it, you have plenty left for trading.
I am not daytrading however, my fastest trade method produces 1 trade per 2 weeks. I never lost 4 trades in a row with this method.
So, I take initial size say 10k, initial bet 2.5 k and if loss, I have 3 trades left, 7.5k, with same size.
If win, say 5k, increase size proportioning win across 4 trades which would be 3.75k per trade.
I need this way to keep me alert.
So, I take initial size say 10k, initial bet 2.5 k and if loss, I have 3 trades left, 7.5k, with same size.
If win, say 5k, increase size proportioning win across 4 trades which would be 3.75k per trade.
I need this way to keep me alert.
What is the win rate and average profit/average loss ratio? Regards
"mismanage trades due to psychological issues" and "consistent profits" are mutual exclusive IMHO. I don't see to how you churn out consistent profits while being emotionally unstable.
Well to answer your question. Look at max drawdown part of your CALMAR ratio and see how much more leverage you can add to still have a max draw down you can live (ie. survive with).
For example you make 50% return for a max peek to valley draw down of 10%. Then you can double your leverage and make 100% return for a draw down of 20%.
math is a bit different than with ST trading.
It goes like this:
I need 10 wins 3:1 and starting bet 10k, to arrive to 1.5M.
If I say bet 10K and lose, must first get back 10K before increasing size.
As I said, this is to keep me alert. I cannot concentrate when ST trading.
In my latest batch in AUDJPY, I started with 12 k and now up ~65% after 3 trades, 2 win 1 loss, so my next bet size is 5.6k.